STRF: Strategy's Senior Fixed Preferred Stock

Important Disclosures

This profile has been prepared by True North Research, a media and research subsidiary of Strive, Inc. (“Strive”). It summarizes certain publicly available information and internal analysis relating to Strategy’s senior fixed preferred stock (“STRF”) and its capital structure. It is part of a broader “Digital Credit” educational initiative and is provided for informational and educational purposes only.

This content is non-independent and should not be relied upon as a complete or current description of STRF, Strategy, or any offering. It does not constitute an offer to sell or a solicitation of an offer to buy any security, nor does it constitute investment, legal, accounting, or tax advice. It does not take into account the objectives, financial situation, or needs of any particular investor. Investors should make their own independent evaluation and consult their own advisers.

Any offer or sale of securities will be made only through the applicable offering documents and SEC filings, including those available on SEC EDGAR.

Because True North is a Strive subsidiary, Strive and its personnel may have economic interests in Digital Credit instruments discussed. This creates actual and potential conflicts of interest that readers should carefully consider.

Instrument Overview

STRF is Strategy’s (Nasdaq: MSTR) senior-most perpetual preferred stock.

It is a non-convertible, fixed-rate, cumulative preferred designed to sit at the top of the company’s preferred stack, directly below debt.

Strategy priced the original 8.50-million-share offering on March 20, 2025 at $85 per share, with a $100 stated value and a 10.00% annual cash dividend paid quarterly. Strategy describes STRF as its “senior-most perpetual preferred stock.”

As of March 16, 2026, STRF traded at $100.29 — approximately a 0.3% premium to par — delivering an effective yield of 9.97% based on current inputs. Notional outstanding is approximately $1.284 billion across ~12.84 million shares.

In simple terms, STRF is designed to provide fixed income with priority positioning within Strategy’s preferred capital structure, without equity conversion features.

Within the Digital Credit framework used by True North, STRF is generally positioned as a senior preferred instrument emphasizing income stability and structural protection relative to other preferred series.

(Sources: Strategy pricing release, March 21, 2025; Strategy.com STRF page.)

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Key Terms

(Sources: Strategy 424B5 prospectus supplement; Strategy pricing release, March 21, 2025.)

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Rate History

STRF has carried a fixed 10.00% rate since issuance, with no adjustments, resets, or step-ups.

There is no floating spread or board-adjustment mechanism. This differentiates STRF from variable-rate instruments such as STRC and SATA.

As a result, STRF represents a long-duration fixed-rate preferred structure. Its dividend rate does not adjust with market conditions, which may affect price behavior as interest rates and risk premiums change.

(Sources: Strategy.com STRF page; Strategy 10-K 2025.)

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How It Works in Practice

Dividend mechanics. Dividends are declared quarterly by Strategy’s board and paid solely in cash out of legally available funds. The cash-only structure distinguishes STRF from instruments that permit stock-based payments. Strategy reported dividend payments on STRF in its 2025 10-K.

For U.S. federal income tax purposes, Strategy indicated that 100% of 2025 distributions qualified as nontaxable return of capital. Return of capital reduces adjusted tax basis rather than generating immediate income. Tax treatment is determined annually and may differ from expectations; preliminary classifications should not be treated as guarantees.

Step-up penalty mechanism. STRF includes a cumulative compounding structure with escalating penalties on missed dividends. If a dividend is not paid, the accrual rate increases above the stated rate and continues to step up with additional missed periods, subject to a capped maximum rate.

This structure increases the economic cost of non-payment for the issuer. It does not eliminate the risk of missed payments but may influence issuer incentives in stress scenarios.

Governance rights. Extended non-payment triggers governance provisions. After a defined number of missed dividend periods, holders gain the right to elect preferred-stock directors to Strategy’s board.

These features provide additional enforcement mechanisms compared with standard cumulative preferred structures, though their effectiveness depends on broader financial conditions.

Fundamental change repurchase right. In certain defined “fundamental change” events, holders may require Strategy to repurchase shares at stated value plus accrued dividends. This provides conditional downside protection in specific corporate scenarios but is not equivalent to a bond maturity and does not protect against market price fluctuations.

(Sources: Strategy pricing release, March 21, 2025; Strategy SEC filings.)

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Capital Structure Position

Strategy’s capital structure ranks:

Debt → STRF → STRC → STRE → STRK → STRD → Common (MSTR)

STRF is the first preferred series to receive dividends and the first preferred in line in a liquidation, after all debt is satisfied. Strategy designates it as the senior-most preferred instrument.

No dividends may be paid to junior preferred or common equity holders unless STRF dividends are current, reflecting its priority position within the preferred stack.

However, Strategy’s disclosures emphasize that preferred securities represent claims on residual assets. Seniority provides relative positioning within the capital structure, not absolute protection against adverse outcomes.

A useful framing is relative rather than absolute: STRF represents the most senior position within the preferred layer, but remains exposed to the underlying balance sheet, which is heavily influenced by Bitcoin.

(Sources: Strategy 424B5 filings; Strategy.com STRF page.)

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Who This Instrument May Suit

STRF has characteristics that may be relevant to investors who:

• Prioritize structural seniority within a preferred equity framework
• Seek fixed-rate income with cash-only dividend payments
• Value cumulative dividend structures with escalation features
• Prefer reduced exposure to equity-linked optionality

STRF may be less aligned with the objectives of investors who:

• Seek maximum current yield within the Digital Credit category
• Prefer instruments with equity participation features
• Require contractual maturity or bond-like characteristics
• Are not comfortable with Bitcoin-linked balance sheet exposure

These observations are general and do not constitute a recommendation. Each investor must determine suitability based on their own circumstances.

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Key Risks Specific to STRF

Duration and spread risk. STRF is a fixed-rate perpetual instrument with no maturity or pull-to-par mechanism. Changes in interest rates, credit spreads, or market risk appetite may result in price volatility independent of dividend payments.

Perpetual structure. Without a maturity date, capital recovery depends on market pricing or issuer actions rather than contractual repayment. This differs from fixed-income instruments with defined maturities.

Market pricing near par. When trading near or above stated value, potential downside may exist if required yields increase or market conditions change. Price movements are not anchored to par in the absence of a maturity mechanism.

Relative—not absolute—seniority. While STRF is senior within the preferred stack, it remains junior to debt and exposed to the issuer’s underlying asset base. Strategy’s balance sheet is highly concentrated in Bitcoin, which may introduce volatility in stress scenarios.

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Current Data Snapshot

(Refresh on publication day)

STRF’s pricing near par reflects market positioning that may incorporate its relative seniority, governance provisions, and fixed-income characteristics within the Digital Credit category.

Whether the current effective yield appropriately reflects risks such as duration, concentration, and market volatility will depend on individual investor perspectives and assumptions.

→ Full instrument comparison: Markets & Instruments → Scenario analysis and stress testing: Risk Analysis → How we analyze: Methodology

This content is provided for informational and educational purposes only. It does not constitute an offer to sell or a solicitation to buy any security. Investors should review all relevant offering documents and SEC filings before making any investment decision.

True North is affiliated with Strive and is not an independent research provider. This creates potential conflicts of interest that should be considered when evaluating this content.